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N.J. pension, benefits plan draws protests
(by Barbara Parker - July 02, 2008)
By BARBARA PARKER
Managing Editor
Bergen County teachers and other school employees joined an estimated 12,000 statewide members of the New Jersey Education Association to stage demonstrations at state senators’ offices on Friday, June 20.
They were protesting proposed changes in the state’s pension and benefits plans for public employees. And they were hoping to influence senators who supported the changes or who had not declared their intentions.
The suggested changes, spearheaded by Sen. Barbara Buono of Middlesex and Sen. Steve Sweeney of Gloucester, who is Senate majority leader, would have cut benefit eligibility for several categories of school employees and reduced pension payouts for employees hired after June 30, 2008, the date which the proposed legislation was scheduled to take effect.
The Assembly Budget Committee and the Senate Budget and Appropriations Committee released a revised and consolidated version of the proposed legislation late Friday night, June 20, and both houses approved the new version, A2818/S1962, on Monday, June 23.
Specifically, several original proposals to which the New Jersey Education Association strongly objected had been removed from the final legislation.
They would have, among other measures:
n Eliminated pensions for future part-time teachers and school employees.
n Changed the formula for calculating pension benefits from three years to five years for new employees, effectively lowering the average salary on which benefits amounts are based.
n Required employees work a minimum 30 hours a week to participate in the pension system.
n Required that employees work a minimum 35 hours a week to qualify for health benefits, as opposed to the 20 hours a week now required for local employees.
n Allowed employees to choose only one public job as a basis for the calculation of benefits.
Other measures to which the NJEA objected did remain. Among them:
n Raising the retirement age from 60 to 62 for future employees.
n Raising the annual salary threshold for pension eligibility for future employees to $7,500, to be adjusted annually by the CPI or 4 percent, whichever is less.
The final legislation also eliminated one paid holiday a year by combining Lincoln and Washington’s birthdays.
The rationale underlying the legislation is the urgent need for the state to come up with a way to fill the coffers of the unfunded state pension plan, which now has a liability of $25 billion, factoring in all state employees, teachers, police and firefighters.
The state has not made payments to the fund for a number of years.
By tightening up eligibility and income standards, lawmakers hope to eliminate retirees who are taking unfair advantage of the system, most conspicuously, political appointees who accept low-paying jobs for a number of years, then cash in on lucrative positions in the last years of their employment.
Gov. Jon Corzine has made the pension shortfall a high priority in his first two budgets, which allocated $1 million each year to the fund. He has proposed making a $1.1 billion contribution in 2009.
At that pace, though, it would take nearly a quarter-century for the fund to catch up to the number of pensioners.
Teachers and other school employees are passionate about their benefits. They have enjoyed a defined-benefit pension plan for many years, whereas most businesses and nonprofit organizations have eliminated such pensions in favor of contributory plans like 401-Ks and 403-Bs.
Teachers and other employees point out that just last year they agreed to pay 5.5 percent of their salaries to the pension fund, up from 5 percent.
For now, the NJEA is claiming victory. Wrote NJEA Joyce Powell on the organization’s Web site, "This battle was never about ‘pension reform,’ because there was nothing…that addressed the documented abuses that continue to drain our pension systems every day.
"It was about pension reduction, and NJEA and its members won the battle to stop that effort in its tracks."
The final bill passed by the Legislature last week is "a fair compromise," said Joseph Coppola Jr, president of the Bergen County Education Association.
"It wasn’t a ‘gotcha,’ " he said. "Neither side won; neither side lost."
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